Skip to main content

COUNTER TRADE

Counter trade, a modern variant of the age old system of trade by barter, has emerged as a new feature of economic relationship. For a nation which is suffering from a drastic reduction in its foreign exchange earnings and trade arrears with Western export credit agencies, counter trade has the attraction of providing goods for the domestic market without draining the scarce foreign exchange. The low credit rating which the country has in the international capital market and the unwillingness of the government to adhere strictly to the international monetary fund's supervised adjustment programme also favour counter trade in the system.
    However, there are grounds for insisting that counter trade should be used with caution. Counter trade is a form of gambling. As with every other forms of trade by barter, one partner is inevitably going to be better off than the other in the end. This will be determined by what monetary value is assigned to the goods exchanged and how constant this remains within the duration of the transaction. For example, if the agreement is based upon the current price of oil, a subsequent price decrease will make Africa exchange more barrels of oil for the same value of goods, while an increase in price will yield the opposite effect.

Comments

Post a Comment

Popular posts from this blog

Natural soil

 Natural soils are influenced by rainfall and temperature,heavy rain causes the soil to become leached. High temperatures increase the rate of decomposition of organic matter in the soil, thereby lowering its humus content. Thus, climatic conditions tend to produce poor soils in the tropics and rich soils in the temperate regions. Besides climate and vegetation, the parent rock material also contributes to the quality of the soil. For example volcanic rocks tend to produce fertile soils.    Laterite, a red soil which is a product of leaching, is commonly found in the tropics. It is composed mainly of iron and aluminium compounds,and poor in humus and essential plant nutrients, such as phosphorus, nitrogen and potassium. The black and brown soil of the temperate grasslands are the world's richest soils, with a high mineral and humus content. The light coloured desert soils tend to be very rich in minerals but have a low humus content.    Mainly the soils ar...
Post a Comment
Read more

Rock Formation

A rock may be defined as a hard compact mass made up of cluster of primary or secondary minerals. The primary minerals are those that are as they were made in nature. Some of them are Quartz, Olivine, Pyroxene, Hornblende, Biotite, Muscovite and feldspar. On the other hand, secondary minerals consists of particles worn out from original minerals which have combined with other elements. They exist in form of: (i) Oxide such as those of magnesium, Iron and Aluminum. (ii) Sulphates and carbonates of Iron, Magnesium and Calcium. (iii) Clay minerals such as the silicate clays and the hydrous Oxide.   TYPES OF ROCKS (i) Igneous rock (ii) sedimentary rock (iii) Metamorphic rock. Based on their chemical composition, we have basic and acidic rocks. Granite is a very good example of an acid rock. PROCESSES OF ROCK FORMATION IGNEOUS ROCK :This is formed through the process of cooling and hardening of the molten magma. This molten magna is confined deep down below the earth crust und...
1 comment
Read more

Physical fitness

Physical fitness is the ability to function effectively throughout your workday, perform your usual other activities and still have enough energy left over to handle any extra stresses or emergencies which may arise.      There are 5 Components of Physical Fitness The 5 components of physical fitness are often used in our school systems, health clubs and fitness centers to gauge how good a shape we are truly in. The 5 components that make up total fitness are: Cardiovascular Endurance Muscular Strength Muscular endurance Flexibility Body Composition Total fitness can be defined by how well the body performs in each one of the components of physical fitness as a whole. It is not enough to be able to bench press your body weight. You also need to determine how well you can handle running a mile etc. A closer look at the individual components: Cardiovascular endurance is the ability of the heart and lungs to work together to provide the needed oxygen and fuel t...
Post a Comment
Read more